Indeed, about 46 percent of senior citizens in the United States have less than $10,000 in financial assets when they die. Most of these people rely almost totally on Social Security payments as their only formal means of support, according to the newly published study, co-authored by James Poterba of MIT, Steven Venti of Dartmouth College, and David A. Wise of Harvard University.

That means many seniors have almost no independent ability to withstand financial shocks, such as expensive medical treatments that may not be covered by Medicare or Medicaid, or other unexpected, costly events.

"There are substantial groups that have basically no financial cushion as they are reaching their latest years," says Poterba, the Mitsui Professor of Economics at MIT.

However, the study — one of the first to examine Americans' end-of-life finances — also reveals a diversity of outcomes among senior citizens. Between 1993 and 2008, it found, unmarried older individuals had median wealth of about $165,000 roughly a year before they died — a figure that includes current and future Social Security income, job-related pension benefits, home equity and financial assets. In the same period, the median wealth for continuously married senior citizens, roughly a year before they died, was more than $600,000.

"There is a lot of divergence in how people are doing," Poterba says. Those disparities also complicate the public-policy issues relating to the new findings.

"One of the clear messages is that it is very hard to do a one-size-fits-all retirement policy," Poterba says. "We need to recognize that, for example, if we were to substantially reduce Social Security benefits for those later in life, that there is a share of the elderly households for whom that would translate very directly into reduced income, because they seem to have accumulated little in the way of financial resources." ...[continue reading]...

Republicans would likely respond that people have so few assets because they rely upon the government to take care of them -- cut Social Security and they'd save more -- but history suggests otherwise. There's a reason we have a Social Security program (and other programs such as Medicare), and reducing benefits would make it even harder than it already is for a substantial number of the elderly.

...this report will raise speculation that the Fed will do more to stimulate the economy at its next meeting. But the Fed was already aware of the risks from Europe and elsewhere, and if weaker numbers over the last few months weren't enough to prompt the Fed to do more, it's hard to see how the slight improvement in the numbers would alter the Fed's course, particularly if subsequent data reinforces the "things aren't as bad as they seemed over the last few months" point of view.

The null hypothesis for the Fed could be "we'll do more to stimulate the economy at the next meeting unless there is overwhelming evidence that we shouldn't," or it could be "We'll keep policy on hold unless there is overwhelming evidence we should do more." I believe the Fed is looking for reasons not to act, i.e. it has the second null, and that this report is not the overwhelming evidence they need to change their view.

Employment Day Updates, by Tim Duy: I am on a tight schedule this morning, leaving in a few minutes for a meeting in Salem, so I don't have time for extended comments on this morning's employment report. The report surprised on the upside, with nonfarm payrolls adding 163k jobs, a clear improvement from the last three months:

On the surface, this would seem to weigh against additional Fed action at their September meeting. I would say the counterargument is two-fold. First, wage growth continues to stagnate:

Low wage growth is a consequence of sustained weakness in labor markets and should be seen as further evidence inflation will remain "at or below" levels consistent with the Fed's mandate. Second, the internals on household survey were weak. Employment dropped 195k, reducing the employment to population ratio to 58.4, while the ranks of the unemployed grew by 45k. The labor force participation rate declined further to 63.7, down from 64.0 a year ago. No progress on the unemployment rate, which edged up a notch.

The establishment survey argues for a steady hand, the household survey argues for easier policy (arguably, even the establishment survey argues for easier policy, but I don't think the Fed sees it this way). Also note that we have another employment report before the next meeting. That said, if I had to choose today, I think that the establishment report would get the upper hand, pointing to steady policy in September. But there is lots of data between now and then.